Hello everyone. Days ago, I published idea titled 'Will BABA terminate the downtrend line this time?' I listed reasons why BABA got my attention as below:
1. abcd completion with a continuation measured move failure indicated that sellers might be exhausted.
2. Strong bullish engulf candle formation plus gap-up candle created today indicated the third try of penetrating the downtrend line might be different compared to the first two tires.
3.The red downtrend line starting from June 28th, has been respected for 100 days. Time is another issue, yet not so supportive under such circumstance.
You can see how the price rallied from $156 to $181 in a strong mode after the post. Three gap-ups with a steeper angle indicating momentum is accelerating. However, I would recommend not rushing into the bullish trade as trouble zones or levels ahead($186 and $197 respectively).
After directly violated the downtrend line, price has been up by 14% with no pullback. It's too strong and perhaps need a rest to have another leg-out. I would suggest load some shares when price retest lower level say, $164-162. However, I don't know if it can fall that deep. It's always the fear of missing out or fear of loss that we need to deal with.
Actually, I personally loaded some HK tech ETF which have huge exposure to BABA and Tencent, both of whom I'm keen to hold. The setup works every well. I will load more in the coming days. The overall strategy is the more it drops, the more I will buy. Target is at least 30% above as I believe the report of Jack Ma who was said to study agriculture in Spain marked a turn around sign for the company and even the tech sector. I guess the worst moment is over.
What do you think? Give me a like if you're with my view.
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I'm moving my support zone a bit higher to the nearest gap-up area. If price pulls back here, it'll be a nice place to load some.
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Zone has been tested and price got response to it. Gotta check the daily candle for the confirmation.
I think the trouble zone you speak of will occur sometime just prior to or at earnings. If it has a good report then it will push through to 210-230 area.
JICPT
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@MizzouChemRxn, Yep, you're right. I marked the trouble zone hoping to have pullback long opportunities. What you said is really possible. Let's see if market gives the chance for the retest.
MizzouChemRxn
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@JICPT, Thanks for the update. I sold out my 11/5 call options when it popped up to 181 area. Unfortunately, I snapped them back up on Friday around 177-178 support and now I'm bleeding a bit from it... kind of a wash overall since I was in them before the second jump.
The most recent move kind of looks like the last move up from the 140-160 range. A momentum move with an ascending triangle, then another momentum move with a... bull flag?
JICPT
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@MizzouChemRxn, BABA may pull back a bit before popping up again. It's hard to project the two at the same time-where the price can be and how long it takes to be there. Expiration is coming soon(I assume you buy the call with expiration on Nov.5th). so be cautions, the time decay might bite your profit with the market is on your side.